Business and management

Banking and the Vatican

No plastic for the Pope

SINCE the beginning of the new year, tourists in Rome who want to visit the Sistine Chapel and see the papal art collections have had to put up with some unholy complications. At the end of a tedious hike from Saint Peter's square and often lengthy queuing alongside the Vatican's walls, they are being told that they cannot pay with credit or debit cards. Those without €16 ($21) in cash for an adult ticket have to walk ten minutes to the nearest bank with an ATM. (Cash dispensers in Vatican City are, incidentally, unique in providing the option of instructions in Latin.)

The refusal is the result not of a papal edict banning electronic payments, but of a decision by Italy’s central bank, which doubles as the country’s banking regulator. Payment services in Vatican City have been provided by the Italian arm of Deutsche Bank since 1997, but it did so with out the necessary authorisation. So the Bank of Italy told it to stop processing the payments. It even refused Deutsche’s request for a moratorium.

The reason for central bank's tough stance is that it has to comply with the European Union’s banking and anti-money-laundering law. This law permits EU banks to operate in non-EU countries only if these have adequate regulatory frameworks and supervisory controls in place. Brussels keeps a list of countries that are considered to satisfy requirements, and the Vatican is not on it.

In July Moneyval, an international body that assesses anti-money-laundering systems, decided that the Vatican's was not up to snuff—the Istituto per le Opere di Religione (IOR), the Vatican's bank, has yet to clean up its reputation. The Bank of Italy says that it has been trying to make all banks operating in Italy aware of the situation. “Banking business conducted by IOR cannot benefit from the simplified controls for which EU banks are eligible,” it notes on its website.

Nobody knows how long the Vatican’s retail business with the outside world will remain cash-only (the interruption also affects the Holy See’s pharmacy, which is much used by ordinary Romans). Fortunately, pilgrims need not worry, at least until November 21st. This date marks the end of the Annus Fidei, the year of faith, during which they can visit the Vatican for nothing. And no earthly power will be able to stop them: instead of cards or cash, they just have to show a document issued by a parish or other ecclesiastical authority attesting to their pilgrimage.

Italy's third-largest bank, Monte dei Paschi di Siena (MPS) has just needed a government bail-out after going to the wall over derivatives trading - and all the Italian banking regululator (the Bank of Italy) is worried about is people paying the Vatican museums entrance fees by credit and debit card.
Why the Vatican does not sign up with a processor outside Italian and EU control beats me.